Wells Fargo reaches $590M Wachovia settlement

By the Associated Press | August 5, 2011 | 3:15 PM EDT

NEW YORK (AP) — Wells Fargo & Co. says it has agreed to pay $590 million to settle a class-action lawsuit filed by investors in Wachovia securities.

The settlement would end a 2008 suit that charges Wachovia misled investors in its bonds and preferred securities by understating losses associated with risky mortgages. Wells bought Wachovia that year.

The San Francisco bank says in a regulatory filing that the deal needs court approval before it can go through.

Investors including several New York City pension funds for teachers, police, firefighters and other employees maintain in the suit that Wachovia repeatedly claimed its mortgage loans were made with high underwriting standards, but that the bank actually lent using risky policies. It also claims Wachovia concealed its mortgage-related losses to prop up its stock price.